Competitor for Bitcoin: Japan and Lithuania testing digital currency

  • The Bank of Japan has announced that it will begin a trial period for its central bank digital currency, the digital Yen.
  • Lithuania will launch the first digital currency issued by a central bank in the European Union.

The race for a central bank digital currency (CBDC) is accelerating. In separate official announcements, the central banks of Japan and Lithuania announced the start of different phases for their CBDCs. While the Bank of Japan is moving towards a test phase, Lithuania is preparing for the launch of the CBDC called LBCOIN. So a competitor for cryptocurrencies and Bitcoin could enter the economic scene soon.

In a report published yesterday, the institution declares its intention to collaborate with relevant organizations to accelerate its launch in a rapidly growing technical environment. The Bank of Japan is proposing to start a testing phase to:

(…) check the feasibility of CBDC from technical perspectives, collaborate with other central banks and relevant institutions, and consider introducing a CBDC.

Among the obstacles for the financial institution to launch its CBDC are universal access and the use of CBDC in emergency situations or in situations of scarce energy supply that could be caused by a natural disaster. The first objective, to provide universal access, aims to find solutions so that CBDC can be used by all and not only those who have a smartphone or Internet access.

Although Japan has one of the largest economies in the world, it also has a significant population of people over 60 years. According to a survey by the Nikkei firm, about 65% of Japanese people do not have a smartphone. So the financial institution will focus on making its CBDC easy to use for “a variety of users”, as the Bank of Japan says:

Both centralized and decentralized types have pros and cons. (…) In the case of massive transactions for retail use cases in advanced countries, it is better to adopt the centralized type. (…) In the case where the amount of transaction is limited and resilience and future possibility are prioritized, there is room to consider the decentralized type.

A race against Bitcoin (BTC) and China

On the other hand, a report states that the Lithuanian authorities are preparing to issue the first CDBC in the Eurozone, the LBCoin. The Eastern European country is known for its pro-crypto policies. Like Japan, it has accelerated the development of its CBDC to counter the effect of the launch of China’s digital coin, the digital Yuan.

In that regard, a representative of the Bank of Lithuania said that until recently and due to the emergence of the digital Yuan, they were not considering issuing a CBDC. However, the representative said, “we must give society what it wants to have”. On Thursday next week, Lithuania will issue 24,000 tokens that can be purchased in packages of 6 for 99 euros each. On the launch, the representative of the Bank of Lithuania, said:

At a time when central banks are beginning to change their thinking on digital currency, LBCOIN is probably the most advanced experimental playground to test different reincarnations of the CBDC.

About Author

Reynaldo Marquez has closely followed the growth of Bitcoin and blockchain technology since 2016. He has since worked as a columnist on crypto coins covering advances, falls and rises in the market, bifurcations and developments. He believes that crypto coins and blockchain technology will have a great positive impact on people's lives.

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